Final Exam

Question 1

What are some benefits of budgeting?

Answer 1

-planning ahead and formalize goals
-created objectives for evaluating performance
-early warning system
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Question 2

What are the cons of participative budgeting?

Answer 2

-can be more time consuming and costly
-encourages budgetary gaming

Question 3

What are the 2 segments of budgets and what are their individual parts?

Answer 3

Operating Budgets :
Sales Budgets - Production budgets (DM,DL,OH) - Selling & Admin - Budgeted income statement
Financial Budgets : Capital expenditure - cash - budgeted balance sheet

Question 4

Required Production Units equation

Answer 4

Expected sales units + Desired ending finished goods units - beginning finished goods units

Question 5

DM units to be purchased

Answer 5

DM units required for production + Desired ending DM units - Beginning DM units

Question 6

Total DL Costs

Answer 6

Units to be produced*DL hours per unit * DL costs per hour

Question 7

Required merchandise purchases

Answer 7

budgeted COGS + Desired ending inv - beginning inv

Question 8

Static Budget Reports vs Flexible Budget reports

Answer 8

Static: one activity level, compare with actual results
Flexible: various levels of activity

Question 9

What are the 4 steps in flexible budgets

Answer 9

1.ID of activity index and relevant range
2. ID of the variable costs and variable cost per unit of activity for each cost
3. ID fixed costs and budgeted amount
4. Preparation of the budget for increments of activity

Question 10

Materials Price Variance (MPV)

Answer 10

(AQ) (AP-SP)

Question 11

Materials Quantity Variance (MQV)

Answer 11

(SP) (AQ-SQ)

Question 12

Labour Rate Variance (LRV)

Answer 12

(AH) (AR-SR)

Question 13

Labour Efficiency Variance (LEV)

Answer 13

(SR) (AH-SH)

Question 14

Causes of Materials Variance

Answer 14

-for price look at purchasing department
-for quantity look at production department
-external market factors

Question 15

Causes of labour variances

Answer 15

-higher wages and misallocating workers
-efficiency of workers look at production department

Question 16

Variable OH Spending variance (VOHSV)

Answer 16

(AH)(AR-SR) or (AQ) (AP-SP)

Question 17

Variable OH efficiency variance (VOHEV)

Answer 17

(SR) (AH-SH) or (SR) (AH-SH)

Question 18

Causes of manufacturing overhead variances

Answer 18

-usually look at the production department

Question 19

What are the 5 perspectives to the balance score card

Answer 19

1. Financial
2. Customer
3. Internal Process
4. Learning + Growth
5. Environmental Sustainability